Consumer spending was stronger than expected in September, even as incomes minus government largesse fell, which means the citizenry dipped into its collective piggy bank in order to buy that snazzy new iPhone.

From Dow Jones:

Personal-consumption expenditures—which measure purchases ranging from goods like cars, clothes and food to services such as health care and travel—increased 0.8% in September compared with the prior month, the Commerce Department said Monday. Meanwhile, personal income rose 0.4%.

The savings rate in September dropped to 3.3% of disposable income from 3.7% in August to its lowest level since November 2011. It has been steadily dropping since June.

We all know that consumer spending is two-thirds of GDP. So increased consumer spending on that level alone is a good thing. But, as FTN Financial economist Chris Low pointed out, the rise in personal income in September came courtesy of what’s called transfer payments: government benefits like social security and unemployment compensation.

About MarketBeat

MarketBeat looks under the hood of Wall Street each day, finding market-moving news, analyzing trends and highlighting noteworthy commentary from the best blogs and research. MarketBeat is updated frequently throughout the day, helping investors stay on top of what’s happening in the markets. Lead writers Paul Vigna and Steven Russolillo spearhead the MarketBeat team, with contributions from other Journal reporters and editors. Have a comment? Write to paul.vigna@wsj.com or steven.russolillo@wsj.com.